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Home » Uber Freight expands into West Coast, Midwest, Southeast markets
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Uber Freight expands into West Coast, Midwest, Southeast markets

August 3, 2017
Ben Ames
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Uber Freight said today it has expanded its digital freight brokerage services into the West Coast, Midwest, and Southeast, a sign the broker unit of ride-sharing pioneer Uber Technologies Inc. is undeterred by increasing competition from new and established rivals in the huge but fragmented brokerage space.

The San Francisco-based Uber division, which launched in May in Texas, will now start assigning loads in California, Arizona, the Chicago-Midwest region, Georgia, South Carolina, and North Carolina, the company said in a blog post.

To accompany the expansion, Uber Freight said it is adding features to its app that are designed to memorize drivers' preferences and proactively make load recommendations. The app will analyze drivers' personal histories and suggest loads to each driver based on which routes they like to drive, what types of loads they prefer, and where they want to go, the company said. By providing personalized recommendations, Uber Freight said it intends to "level the playing field" for truck drivers, who have traditionally had no leverage in choosing the loads or routes they prefer.

The firm's expansion came after analyzing feedback from drivers and mapping the locations of shippers that visit Uber Freight's site to request trucks, Eric Berdinis, Uber Freight's product lead, said in a phone interview. The unit has not disclosed figures on the number of shippers booking loads through its app, or the number of drivers who have downloaded the app to their phones.

Uber Freight will continue to focus on serving independent drivers and firms with small fleets, Berdinis said. He said the segment is underserved, with a large supply of truckers and inadequate access to loads. "If we were a traditional brokerage, and we had to make a phone call or email to book a load, it wouldn't be worth it to call someone with only two or three trucks, because with that same phone call we could reach a company with a thousand trucks," Berdinis said.

By using the kind of smartphone-based software model pioneered by its parent, Uber Freight can now reach that diverse market of small truckers cheaply enough to profitably match loads with small carriers, he said.

Uber Freight is not the only logistics technology startup to follow this approach. Since the company launched in May, investors have flooded the "Uber for trucking" segment with venture capital in a series of high profile moves, including a $62 million funding round for Seattle-based Convoy, and $42 million for New York-based Transfix. Other players include Dallas-based Haulme LLC, Fort Lauderdale, Fla.-based Xypper Technologies Inc., and Boulder, Colo.-based 10-4 Systems Inc. Uber Freight also competes with the likes of Lowell, Ark.-based J.B. Hunt Transportation Services Inc. and Eden Prairie, Minn.-based C.H. Robinson Worldwide Inc., established firms with sophisticated technologies, huge customer bases and relationships with thousands of truckers.

Berdinis acknowledged that the company could run into stiff competition from the rising number of well-funded startups. In fact, many truckers have downloaded apps from several of these firms, he said, so the fierce competition for market share is taking place right on the small screens in drivers' palms.

Uber Freight said it would rely on the personalized features and ease of use of its software, according to Berdinis. "We've found that drivers are very savvy about choosing the app that gives them a better lifestyle, lets them earn more, and lets them earn quickly," he said. "We know that drivers will find the app that works best for them, and that they are very loyal once they find an app that gives them attractive payment terms and access to easy-to-haul freight."

User-friendly software may help firms like Uber Freight, Convoy, and Transfix enlist more drivers into their networks, but their "sharing economy" model of matching loads and drivers still faces some hurdles before it can truly compete against established brokers, said Tony Wayda, supply chain practice senior director and principal at Boulder, Colo., consulting firm SCApath.

For example, shippers may be reluctant to choose an owner operator (OO) based solely on information displayed in an app, while drivers may not be confident the app will pay them for "accessorial" charges such as detention and delay, Wayda said. Likewise, without having an existing relationship with the carrier, shippers may demand better accountability for drivers' license and insurance paperwork, and a clearer path for customer service and dispute-resolution complaints.

Finally, many shippers and drivers will never have full confidence in these startups until the firms go public and reveal when—or if—they start turning a profit, Wayda said.

Startups will begin to take share from traditional brokers if they can overcome these obstacles, Wayda said. "Once trust is built, I think this business model will quickly get traction. The economics work for both the shipper and owner operator, and in theory could help commercial carriers eliminate empty miles. Some money is better than none when empty."

Transportation Trucking
KEYWORDS 10-4 Systems convoy Haulme Transfix Uber Uber Freight Xypper Technologies Inc.
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Benames
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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